(Adds more details)
KUALA LUMPUR, Oct 25 (Reuters) - Malaysian Prime Minister
Najib Razak unveiled his government's budget for 2014 on Friday,
seeking to address a large fiscal deficit, shrinking current
account surplus and growing debt pile that are sources of
concern for investors and ratings agencies.
For a preview of the budget, click on
For Malaysia's economic reports, see
Malaysia's CPI hits 20-month high
Following are highlights from Najib's ongoing speech to
parliament:
CIVIL SERVICE
* Pensioners will receive a special financial assistance of 250
ringgit to assist them meet the rising cost of living.
* Government to give a half-month bonus for 2013 with a minimum
payment of RM500 to be paid in early January 2014.
CASH HANDOUTS
* Cash handouts to households with a monthly income of below
3,000 ringgit will be increased to 650 ringgit from 500 ringgit.
* For individuals aged 21 and above and with a monthly income
not exceeding 2,000 ringgit, cash handouts will be increased to
300 ringgit from 250 ringgit.
* For the first time, cash assistance of 450 ringgit will be
extended to households with a monthly income of between
3,000-4,000 ringgit. rising cost of living borne by the lower
middle-income group.
* To implement all cash schemes, government will allocate 4.6
billion ringgit which is expected to benefit 7.9 million
recipients.
REAL PROPERTY GAINS TAX
* For gains on properties disposed within the holding period of
up to 3 years, RPGT rate is increased to 30 percent.
* For disposals within the holding period up to 4 and 5 years,
the rates are increased to 20 percent and 15 percent,
respectively. Malaysian property firms with exposure to this tax
change include UEM Sunrise, Mah Sing Group
and Tropicana Corp .
* Raise the minimum price of property that can be purchased by
foreigners to 1 million ringgit from 500,000 ringgit.
* Prohibit developers from implementing projects that have
features of Developer Interest Bearing Scheme (DIBS), to prevent
developers from incorporating interest rates on loans in house
prices during the construction period.
* Financial institutions are prohibited from providing final
funding for projects involved in the DIBS scheme. Malaysia's top
three banks are Maybank, CIMB and Public
Bank.
AFFORDABLE HOMES
* To further increase access to home ownership at affordable
prices, an estimated 223,000 units of new houses will be built
by the government and the private sector in 2014.
- Companies that specialise in affordable housing
development include Hua Yang Bhd.
* Government to allocate 578 million ringgit to the National
Housing Department (JPN) for low cost flats consisting of 16,473
housing units.
* Malaysian's government to provide 80,000 housing units with an
allocation of 1 billion ringgit under affordable housing scheme.
The sales price of the houses will be 20 percent lower than
market prices.
* Introduce the Private Affordable Ownership Housing Scheme
(MyHome) to encourage the private sector to build more low and
medium-cost houses. The scheme provides a subsidy of 30,000
ringgit to the private developers for each unit built.
* Preference will be given to developers who build low and
medium-cost houses in areas with high demand and limited to
10,000 units in 2014.
* The scheme is for housing projects approved effective from 1
January 2014 with an allocation of 300 million ringgit.
TAX RELIEF
* Government proposes a special tax relief of 2,000 ringgit be
given to tax payers with a monthly income up to 8,000 ringgit
received in 2013.
GOODS AND SALES TAX
* To implement goods and services tax (GST) on April 1, 2015 -
17 months from now.
* GST rate fixed at six percent, the lowest among ASEAN
countries.
* GST replaces current sales tax.
* Basic food items, transportation services, highway tolls,
water and first 200 units of electricity for domestic users per
month to be exempt from GST.
* Sale, purchase and rental of residential properties as well as
selected financial services are exempted from GST.
* PM Najib: "The reality is that inflation now is low at around
2 percent. The government is confident this will be the best
time to impose GST as inflation is minimal and under control."
* Training grant of 100 million ringgit will be provided to
businesses that send their employees for GST training in 2013
and 2014.
* Financial assistance amounting to 150 million ringgit will be
provided to small and medium enterprises for the purchase of
accounting software in 2014 and 2015.
CORPORATE TAX
* corporate income tax rate be reduced by 1 percentage from 25
percent to 24 percent.
* income tax rate for small and medium companies will be reduced
by 1 percentage point from 20 percent to 19 percent from the
year of assessment 2016.
INCOME TAX
* government to give one-off cash assistance of 300 ringgit to
low income households
* personal income tax rates be reduced by 1 to 3 percentage
points for all tax payers.
* individual income tax structure will be reviewed
* chargeable income subject to the maximum rate will be
increased from exceeding 100,000 ringgit to exceeding 400,000
ringgit.
* Current maximum tax rate at 26 percent to be reduced to 24
percent
* measures to be effective in 2015
SUBSIDIES
* Subsidy programme to be "gradually restructured"
* A portion of savings from restructuring to be distributed in
the form of direct cash assistance with the other half to
finance development projects.
* To abolish the sugar subsidy of 34 sen effective October 26
2013.
IMPROVING BUDGET MANAGEMENT
* committed to reducing the fiscal deficit gradually, with the
aim of achieving a balanced budget by 2020.
* to ensure federal debt level will remain low and not exceed 55
percent of GDP.
* government to conduct audits on projects valued at more than
100 million ringgit during its implementation.
ISLAMIC FINANCE
- Securities Commission to introduce the a framework for Social
Responsible Investment (SRI) Sukuk, or Islamic bonds, to finance
"sustainable and responsible" investment initiatives.
AGRICULTURE
- Government to allocate six billion ringgit allocated for
agriculture programmes.
* Says to 243 million ringgit allocated for rubber, palm oil
and cocoa replanting as well as forest plantation programmes.
Main plantation companies in Malaysia include Sime Darby
, IOI Corp and KL Kepong.
LOGISTICS
- Government to allocate 3 billion ringgit in soft loans under
the Maritime Development Fund through Bank Pembangunan Malaysia.
* The fund is to provide financing to encourage the development
of the shipping industry, shipyard construction, oil and gas as
well as maritime-related support activities.
AVIATION
- To replace existing air traffic control and management system
in Subang, a new air traffic management centre costing 700
million ringgit will be built at Kuala Lumpur International
Airport (KLIA).
* Kota Kinabalu, Sandakan, Miri, Sibu and Mukah airports in
Sabah and Sarawak to be upgraded with 312 million ringgit
allocation.
- Malaysia Airports manages and operates all airports
across the country except for one in Johor.
PUBLIC INVESTMENTS
* Public investments to reach 106 billion ringgit. Projects to
be implemented include:
- A 316-kilometre West Coast Expressway. Locally listed Kumpulan
Europlus Bhd owns 80 percent of the project, while IJM
Corp owns the balance 20 percent.
- Double-tracking rail project along west coast Malaysia. The
project is carried out by as a joint venture between MMC Corp
and Gamuda.
- Various projects from state oil firm Petronas under
its 300 billion ringgit capex programme, including a
petrochemicals plant in southern Johor state.
* INTERNET ACCESS
- To carry out second phase of high-speed broadband project
with the private sector involving 1.8 billion ringgit
investment. State-linked telco Telekom Malaysia Bhd
is involved in the project.
- To increase Internet coverage in rural areas, 1,000
telecommunication transmission towers will be built in the next
three years, with an investment of 1.5 billion ringgit.
- To increase Internet access in Sabah and Sarawak, new
underwater cables will be laid within three years at a cost of
850 million ringgit.
(Reporting by Kuala Lumpur bureau; Editing by Niluksi
Koswanage)